Airlines set for loss over EU emissions trading

European Union efforts to force international airlines to pay for their polluting emissions received a big boost Thursday when a legal adviser urged the EU's highest court to reject a U.S. challenge.

Several U.S. and Canada-based airlines and airlines associations had sued the EU for its plan to include them in the emissions trading scheme as of next year. Under that plan, all airlines would have to have costly emissions permits for flights to and from EU airports. So far only large factories and power plants are part of the scheme.

The North American airlines challenged it, arguing the EU could not impose such rules that have impact on the industry outside the bloc. On top of that, they said the rules also contravene international aviation agreements.

Among several complaints, the airlines had argued that the EU lacked the jurisdiction to require permits for emissions produced during the entire flight, or even stretches that cross the air space of non-EU countries.

But Juliane Kokott, the European Court of Justice's Advocate General, disagreed with their arguments Thursday.

"The inclusion of international aviation in the EU emissions trading scheme is compatible with the provisions and principles of international law invoked," she said in her opinion to the court. The advocate general's opinion is not binding for the court but is followed in most cases. A final ruling usually comes several months after the opinion.

"We maintain our strong legal and policy objections to the inclusion of flights by non-EU carriers in the" EU system, said Krishna R. Urs, the U.S. deputy assistant secretary of state for transportation affairs.

"We, along with several other states, intend to continue to press our European partners to exclude non-EU air carriers" from the system, Urs said.

The Air Transport Association of America industry group rejected Thursday's legal opinion.

"ATA's view that the extension of this unilateral, regional scheme to aviation violates international law is supported by more than 20 countries," including Brazil, Russia, India, China and Japan, the ATA said in a statement.

It said Thursday's development was "a nonbinding, preliminary opinion, it does not mark the end of this case."

The emissions trading scheme is the EU's main tool in its fight against climate change. The new pollution restrictions are designed to encourage airlines to reduce greenhouse gases that contribute to global warming by switching to cleaner fuels or economizing on fuel consumption.

Each carrier will be allocated permits to emit a set amount of carbon dioxide. They can buy extra credits if they exceed that limit or sell credits if they emit less.

Air travel is responsible for about 3 percent of greenhouse gases, but their share of global emissions is rising rapidly. Although thousands of airlines will fall under the scheme, 50 major carriers are responsible for about 70 percent of the emissions.

"I am glad to see that the Advocate General's opinion concludes that (the) EU Directive is fully compatible with international law," the EU's Commissioner for Climate Action Connie Hedegaard said. "The EU reaffirms its wish to engage constructively with third countries during the implementation of this legislation."

Environmental groups also welcomed it. Tim Johnson, director of the Aviation Environment Federation said in a statement that it "is a positive step towards ensuring that airlines operating from European airports will become accountable for their carbon emissions."

The EU has argued that it planned to include all airlines into its scheme since most other major nations and regions do not have a similar system. Forcing only European airlines to buy permits would have put them at a competitive disadvantage compared to their foreign competitors and undermined the effectiveness of the scheme.